Disclosure Laws Under Attack

Mon, 08/23/2010 - 6:14pm — Brian

Even after the Supreme Court's Citizens United decision rolled back longstanding state and federal laws that attempted to limit corporate influence in democracy, opponents of any type of campaign finance rules have redoubled their efforts to weaken transparency in elections. Two right-wing political organizations and a business group recently sued[1] to block the state of Minnesota from enforcing campaign disclosure and donation laws. They are seeking an injunction to prevent the implementation of the state's rule for corporations to disclose their political activities. In addition, they "seek to overturn prohibitions on corporations contributing directly to campaigns and parties." Currently, as a result of Citizens United, corporations can fund advocacy groups who can support and oppose certain candidates, but not the candidates themselves. If their lawsuit is successful, corporate financing of campaigns would expand to even greater levels.

Due to the state's current disclosure rules, donations from companies such as Target and BestBuy to the right-wing group MN Forward came to light. Without the DISCLOSE Act, organizations involved in federal elections are already able to conceal [2]their donors, and President Obama recently warned against[3] "a flood of attack ads run by shadowy groups with harmless-sounding names." "They don't want you to know which interests are paying for the ads," Obama said; "The only people who don't want to disclose the truth are people with something to hide."

If the plaintiffs in Minnesota (which includes a for-profit business and two conservative non-profits: the Taxpayers League of Minnesota and Minnesota Citizens Concerned for Life) are successful, not only would corporations be allowed to hide their political financing from the public, but may even be able to directly contribute to the campaigns of candidates for public office.

It is already extremely difficult, especially without the DISCLOSE Act, to discover corporate financing of political groups. As a report by the Washington Post explains[4]:

Long-standing IRS regulations require some groups to reveal their donors, and that is why the agency suddenly finds itself with what some might see as a more crucial watchdog role, stepping in to monitor disclosure in the absence of the FEC. But the IRS rules also have long-standing loopholes and, with limited resources and enforcement tools, the nation's tax collector is not set up to be a campaign regulator.

"The chances of the IRS being able to catch a violation of the tax law around campaigns is virtually nil," said Marcus S. Owens, a lawyer with Caplin & Drysdale who directed the agency's tax-exempt organizations division for 10 years. "Certainly if it happens, it's going to be well after the election has already ended."

As the assault on the remaining campaign disclosure laws intensifies, spending in elections is about to climb to new heights. Borrell Associates predicts[5] that the Citizens United decision will lead to $400 million in new ads this election season, and that "political ad spending will reach $4.2 billion this year, double the $2.1 billion the firm estimated was spent in 2008."

But the most serious opponents of the effort to shed light on corporate financing in elections are obstructionists in the Senate: the Republicans who vote lock-step to prevent the DISCLOSE Act from coming up for an up-or-down vote. President Obama's call for the Senate to reconsider the DISCLOSE Act, which already passed the House, reminds us that the fight against the enormous corporate clout in our democracy is not over: